All posts tagged Bull market

Original thought is “shockingly rare,” Big Picture blogger Barry Ritholtz wrote on his website this week in a post listing his thoughts for April.

Ritholtz stopped by the Markets Hub this morning to share his original thoughts on the Fed, Bank of Japan, the stock-market rally and the inevitable correction – when it finally gets here.

“Ten percent is a good year, forget a good quarter,” he said of the stock market’s rally, and while some correction would be natural, “we still feel you have to give the bull market the benefit of the doubt.”

Ritholtz talked about the market’s internals, how the Bank of Japan is doing the right thing at the wrong time, and whether or not Ben Bernanke understands the difference between a recession and a depression, and how the central bank should respond to each.

Jeffrey Kleintop, chief market strategist at LPL Financial noted the Dow has a track record of bouncing around these millennium markers before breaking through with any sort of conviction. From Keintop:

– 11,000 was reached in April 2010, and the Dow was not able break free above it until seven months later in November of 2010.

– 12,000 was reached in February 2011, and the Dow was not able break free above it until 10 months later in December 2011.

– 13,000 was reached in February 2012, and the Dow was not able break free above it until 10 months later in December 2012.

Our colleague Mark Hulbert over at MarketWatch notes that Oct. 9 seems to be an oddly common date for turning points in the stock market. Both the 2002-2007 bull market, and the 2007-2009 bear market started on, you guessed it, Oct. 9. So, does this mean another turning point’s at hand? Today is, after all, Oct. 9.

Not necessarily. Hulbert writes:

You might think that there are almost impossibly low odds that two trend changes this momentous would occur on the very same day of the year.

But you’d be wrong. In fact, this is a great illustration of how our gut instincts are poor guides to statistical truths.

Stocks are rolling along Thursday as if the U.S. jobs data were robust and Italy and Spain didn’t have a euro of debt. But, of course, financial markets face all sorts of headwinds that most investors don’t expect to dissipate soon.

And for many investors — or at least those with time horizons beyond today’s close — there’s a nagging question: Have stocks escaped the secular bear market that’s been in place since the collapse of the technology bubble in 2000?

But the ride higher has been fast and furious. Stocks surged straight up for nearly all of October. Then they meandered for the first half of November, fell in the latter part of the month and have essentially been trickling higher ever since.

The index was recently up 7 points or 0.6%, at 1322, meaning it has now surged more than 20% off the bottom. It trades at its highest level since July.

Improving economic data, an accommodative Fed and the fact that Europe hasn’t imploded have all contributed to the recent rally.

The S&P 500 is up 5.4% in 2012.

UPDATE: After lots of discussion in the newsroom, we’ve determined that technically this isn’t a new bull market, but rather the continuation of the existing bull market that started when stocks bounced off the bottom of all bottoms in March 2009.

This may well be one of those posts/articles that rings the bell at a near-term market bottom. But it’s worth asking, in light of recent developments: Has the market already put in a top?

First, there’s the S&P 500 chart, which looks awful right now. The index has drilled right through its 200-day moving average, which in the recent past has proven a resistance point. No longer.

What’s more, the S&P chart, if you blur your eyes and look at it the right way, has appeared to form a dreaded head-and-shoulders pattern. The market peaked in February, put in a higher peak in April, then faltered at a lower peak in early July. (Update: The eagle-eyed Paul Vigna firstwarned us about this here a month ago.)

Such a pattern can mean the market is about to start moving emphatically in a different direction, though that’s not a given. Head-and-shoulders patterns have appeared to form in this bull market before.

The S&P is still above the “neckline” of its head-and-shoulders pattern, which is about 1250. But it’s moving there really quickly. Breaking through that level might confirm a new, downward trend is in place.

While the S&P 500 has added $6.2 trillion in market cap over the past two years, 10 stocks have been dominating the party, accounting for slightly more than 20% of the total increase.

At the top of the list is Apple, which has added $253.68B in market cap since March 9, 2009, according to Birinyi Associates. It is the second-biggest market-cap company in the U.S. now, trailing ExxonMobil, another of Birinyi’s big gainers.

Even after last week’s sell-off, the bull market remains intact, according to Bank of America Merrill Lynch.

What’s surprising is that the nearly 100% gains for the S&P 500 since the market lows of March 2009 just sneaks into the top 10 of 25 bull markets as measured by BAML’s technical analysis group. This may come as a surprise for those thinking that the market has gotten well ahead of itself.

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